To cut emissions, the housing sector has to pull its weight

By Trivess Moore

Wednesday 8 May 2013

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If Australia is to reduce its emissions enough to limit the impacts of climate change, all sectors are going to have to pull their weight.

It’s a big job: scientists tell us we need reduce emissions by up to 90% of 1990 levels by 2050. Australia’s residential sector is a significant contributor to greenhouse gas emissions, primarily through its use of fossil fuel energy.

Many countries, including Australia, have now introduced minimum energy performance standards for new housing to limit energy consumption. However, it is projected that current policies fall short of achieving significant greenhouse gas emissions reductions as required to achieve a 90% reduction of 1990 levels.

Worried about affordability? Zero emissions is affordable

Several advanced economies, including the UK, are making a regulatory transition to zero emission new housing by 2020. The argument is that this building standard will be needed if the residential sector is to contribute to reducing greenhouse gas emissions.

But despite increasing international efforts, setting zero emissions as a minimum building standard in Australia remains elusive. Here, the debate is still focused on affordability versus sustainability.

We’re starting to rectify this issue. Until now there has been little empirical evidence about how much it costs, and what the benefits and practical policy implications are of transitioning to zero emissions housing. Our research is collecting that evidence.

We looked at over 80 different house designs and then applied different combinations of renewable energy technologies. We also analysed existing new housing energy performance policies from Australia, the EU and USA, looking for policy implementation gaps, key trends and current knowledge.

We found that in 2010-11 it would cost A$31,047 more to build a zero emissions standard house (built to an 8 star building envelope with 4.3 kW of photovoltaics and solar hot water) than to build a typical detached 6 star home in Melbourne. This equates to an additional capital cost of 7.8% for house and land packages in Victoria.

If you compare this to a the typical 6 star house in Melbourne and take a perspective over the house’s whole life, accumulated (capital and through-life operational costs), you see economic savings of A$9,981 after 20 years, A$85,568 after 40 years and A$270,112 after 60 years if we have a “low energy price future” (to account for the uncertain future cost of energy, a high and a low energy price future was modelled, drawing upon predictions from the Garnaut Report). The house’s resale value increases by between A$13,000 to A$37,000, which helps to offset some if not all of the additional upfront costs.

Of course, there are also significant environmental benefits. Across a year, if all new detached housing in Victoria is built to a zero emissions standard, it would save 0.05% of the total greenhouse gas emissions (2008 level) for Australia in that year. There would be increasing benefits as new zero emission housing stock was added in following years.

Affordable and sustainable, but ignored by policy

It saves money; it’s good for the environment. So why aren’t we building zero emissions housing? The policy analysis identified five key limitations in current Australian policy:

There is a lack of longer-term goals, specifically zero emissions housing standards and the requirement to include onsite renewable energy technologies where appropriate. Setting such goals would set a clear agenda for the future performance of new housing and allow for innovation in materials, products, technology and building techniques.

There is no pathway to achieve longer-term goals. While not surprising (as there are no longer term goals towards which to build a pathway), a pathway will be critical in a transition to zero emission housing. In places such as the UK and California, policy makers have developed a step-change policy framework to move to zero emission housing standards over ten years. This allows for incremental changes while setting a time frame on the end target.

There are limited links to wider government policies such as greenhouse gas emission reduction or renewable energy generation targets. By linking the targets of these policies to housing performance standards, it would clearly show the importance new housing has on achieving wider environmental protection goals.

There is limited financial innovation. “Affordability” is still viewed as an upfront cost issue; however a zero emission house has very low ongoing energy costs which makes it more affordable in the long run. The financial sector needs to consider this to allow additional costs to be borrowed.

There are limited wider social considerations. For example, a zero emission house should lead to improved indoor air quality which in turn could improve occupant health and reduce impacts to the wider health services of the community.

Zero emissions housing is an economically and environmentally friendly way to build new housing in the state of Victoria, Australia: it should be the dominant form of new housing. But if these gaps in Australia’s policy aren’t addressed, we won’t be able to make the transition.

Without a significant re-think of current approaches, Australian housing energy performance policies risk falling further behind standards of comparable advanced economies. This risks locking current and future occupants into unnecessary environmental damage and high operational costs across the life-span of the house.